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©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1 ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Consumer Sales Promotion: Premiums and Other Promotions
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Consumer Sales Promotion: Premiums and Other Promotions

Feb 25, 2016

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Consumer Sales Promotion: Premiums and Other Promotions. Chapter Objectives. After reading this chapter you should be able to: Understand the role of premiums, the types of premiums, and the developments in premium practice. Recognize the role of price-off promotions and bonus packages. - PowerPoint PPT Presentation
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Page 1: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

1

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Consumer Sales Promotion:

Premiums and Other Promotions

Page 2: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter Objectives

After reading this chapter you should be able to:1. Understand the role of premiums, the types of

premiums, and the developments in premium practice.

2. Recognize the role of price-off promotions and bonus packages.

3. Be aware of the role of rebates and refund offers.

Page 3: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter Objectives (cont’d)

4. Know the differences among sweepstakes, contests, and games, and the reasons for using each form of promotion.

5. Understand the role of continuity promotions.6. Appreciate retailer-driven promotions.7. Evaluate the potential effectiveness of sales

promotion ideas, and appraise the effectiveness of completed promotional programs.

Page 4: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Whopper Sacrifice: Is an Online Premium Worth 10 Friends?

Page 5: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Classification of Major Consumer-Oriented Promotions

Page 6: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Premiums Defined

Premiums

Articles of merchandise or service offered as a form of gift by manufacturers to induce action

on the part of the sales force, trade representatives, and/or consumers.

Page 7: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Figure 20.1: Illustration of a Mail-in Premium

Page 8: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Price-Offs• Price-off promotions: a reduction in a brand’s regular price.

• A price-off is clearly labeled as such on a package.• Effective when a marketer’s objective is to:1. Reward present brand users2. Get consumers to purchase larger quantities of a brand than they

normally would3. Establish a repeat-purchase pattern4. Ensure that promotional dollars reach consumers5. Obtain off-shelf display space6. Provide the sales force with an incentive to obtain retailer support

• Bonus packs: Extra quantities of a product that a company makes available to consumers at the regular price.• Sometimes used as an alternative to price-offs

Page 9: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

FTC Price-Off Regulations(as a result of the 1966 Fair Packaging and Labeling Act)

•Only used on brands with established retail prices•Limit to three per year per brand size•Must be hiatus period (at least 30 days) between

promotions•No more than 50% of volume comes from promotion•Manufacturer must provide display materials•Dealer required to show regular and promotion price

Page 10: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Games

•Games represent a growing form of promotion that is being increasingly used in lieu of sweepstakes and contests• Provide an instant reward• Encourage repeat purchasing from existing brand

users

Page 11: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Avoiding Snafus• PepsiCo game snafu in the Philippines would have made the

company liable for $18 billion• Beatrice Company's Monday Night Football promotion was

foiled by a P&G salesman who broke their code and turned in cards worth $21 million in prize money

• A security employee for the supplier of McDonald’s Monopoly game pieces stole winning tickets and distributed them to friends who obtained $13 million in prize money

• Moral: Promotional games can go awry and brand mangers must go to extreme lengths to protect the integrity of their games

Page 12: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Refunds and Rebates

Refund

Cash reimbursement for purchasing consumer packaged goods.

Rebate

Cash reimbursement for purchasing a durable good.

Page 13: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Figure 20.2: Illustration of a Rebate Offer

Page 14: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Phantom Discounts and Rebate Fraud•Phantom Discounts

• Many consumers never bother to redeem rebates• At the time of brand choice, consumers tend to

exaggerate the benefit to be obtained from a rebate relative to the future effort required to redeem a rebate-offer

•Rebate Fraud• Can occur when rebate offers are promoted, but are

not fulfilled• Consumers can commit fraud by submitting phony

receipts

Page 15: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Sweepstakes and Contests

• Primarily to enhance a brand’s image• Sweepstakes are preferred because they are

relatively inexpensive and simple to execute

Sweepstakes: purely on the basis of chance, no need for proofs of purchase

Contest: solve the specific contest problem and may need proofs of purchase

Page 16: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Figure 20.3: Illustration of a Sweepstakes Offer

Page 17: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Figure 20.4: Illustration of Another Sweepstakes Offer

Page 18: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Figure 20.5: Illustration of Promotional Contests

Page 19: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 19©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Overlay and Tie-In Promotions

•Overlay Promotions: Combines two or more promotion techniques together (e.g., premium offer and a coupon in a FSI).• Increases the likelihood that consumers will attend a

promotional message•Tie-In Promotions: Simultaneous promotion of

multiple brands in a promotion (e.g., intra-company tie-in or inter-company tie-in).• Intra-company (between different companies) • Inter-company (within the same company)• Tie-ins are cost-effective, but lead time is lengthened• The partners’ images should reinforce each other

Page 20: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Figure 20.6: Illustration of an Overlay Program

Page 21: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 21©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Figure 20.7: Illustration of an Intercompany Tie-In Promotion

Page 22: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 22©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Overlay and Tie-In Implementation Problems•Promotion lead time is lengthened•Creative conflicts and convoluted messages may

result from each partner trying to receive primary attention

•To reduce problems, it is important that:1. The profiles of each partner’s customers be similar2. The partners’ images reinforce each other3. The partners be willing to cooperate

Page 23: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Continuity Promotions

•Reward consumers’ repeat purchasing of a particular brand

•Often referred to as reward, loyalty, or, point programs

•Example: Frequent-flyer programs• Encourage consumers to stick with a particular

airline or hotel to accumulate points to use toward free flights and lodging

23

Page 24: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 24©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Retailer Promotions

•To increase store traffic, offer shoppers attractive price discounts or other deals, and build customer loyalty: • Retail Coupons • Frequent-Shopper Programs• Special Price Deals• Samples, Premiums, and Games

Page 25: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Example of a Store-Sponsored Game

Page 26: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 26©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Evaluating Sales Promotion Ideas

•Step 1: Identify the Objectives•Step 2: Achieve Agreement•Step 3: Evaluation System

• Is the idea a good one?• Will the promotions idea appeal to the target

market?• Is the idea unique?• Is the promotion presented clearly?• Is the proposed idea cost-effective?

Page 27: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 27©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Postmortem Analysis

• Judging five characteristics:1. Expense2. Efficiency3. Execution Ease4. Equity Enhancement5. Effectiveness

•Weighting the individual factors:• Program j’s Score =

Page 28: Consumer Sales Promotion: Premiums and Other Promotions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 28©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Evaluation of Three Completed Promotional Programs